NADA briefs area dealers on fair credit compliance in the context of regulatory overreach by CFPB
As has been the case with other regulatory briefings, WANADA joined NADA last week in staging a presentation on Fair Credit law compliance that turned out a standing-room-only crowd of Washington area dealer representatives. Because of the draconian regulatory mentality of the Obama administrationês Consumer Finance Protection Bureau, dealers have two problems: 1) CFPBês position that the financial institutions they regulate should compensate dealer credit arrangers by way of flat fees as opposed to a rating system because 2) auto dealers regularly discriminate against minorities who wind up with higher rates on car loans than non-minorities.
The challenge with the second problem for dealers is CFPBês contention that dealers discriminate against minority car loan customers even when itês non-intentional because discrimination occurs by disparate impact meaning that a minority with a credit offer not as favorable as a non-minority is a victim of discrimination in violation of the fair credit laws.
NADA has taken exception to CFPBês disparate impact position on discrimination on car loans, the impasse being the agencyês lack of accountability to Congress under the Finance Reform Law which created it. In response to this, NADA intends to reintroduce legislation befor the last Congress to nullify CFPBês controversial advisory to banks on car loans from last year. To deal with the prospect of Fair Credit law reprisals against dealer credit arranger that CFPB has put in play, NADA has created a dealer guidance manual entitled Fair Credit Compliance Policy & Program.
A good bit of the NADA briefing dealt with the compliance manual that provides a management solution in the dealership of CFPBês specious disparate impact, position. Principal components covered by NADA lawyers were the recommendations that a Fair Credit program be established; that dealers have their Fair Credit Policy posted in plain view in the store; and that a manager be assigned to administer the program.
To have a look at NADAês Fair Credit Compliance Policy Program publication that was the subject of the briefing click here.Download Bulletin PDF